OilVoice - Roxi Petroleum Provides Update of Activities in Kazakhstan

Roxi Petroleum Provides Update of Activities in Kazakhstan

19 May 2008

Operations Update
Roxi Petroleum plc, the Kazakhstan based oil exploration and development company, announces its current operational status and reserves estimates using GOST standards as reported in a variety of sources for all of the assets operated by Roxi.

David Barker COO, said "We are pleased to give our investors another update of the progress to accelerate the development of all of Roxi’s assets. We are pleased with our work to date and believe we are on track to add significant value to all of the Roxi assets in the near future."

Highlights

• Reported total reserves for all assets, using GOST standards common in the Russian and CIS region, of a total of C1: 12 million barrels; C1 + C2: 40 million barrels; and C1 + C2 + C3: 250 million barrels.
• Mobilized and spudded first well in the Galaz Contract Area on 9 May 2008.
• Began test production on two existing re entry wells in the Galaz Contract Area in May 2008.
• Began physical acquisition of 3D Seismic in the Beibars Contract Area after resolving the land use issue with the Kazakhstan military.
• Finished processing 3D Seismic data in both the Ravninnoe and Galaz Contract Areas. Evaluating results for selection of future wellsites and the delineation of reservoirs.
• Continue test production of Munaily Well #H1 at a consistent water free rate of 100 barrels of oil per day.
• Continue the re-entry program in the Ravninnoe Contract Area on Well #5.

Ravninnoe Contract Area
After completion of the acquisition of the 193 km2 3D seismic survey over the entire Ravninnoe Contract Area at the end of January, 2008, Veritas Caspian LLP has completed the initial processing of the data. Roxi is very pleased with the quality of the data and is starting to evaluate and delineate the structurally and stratigraphically closed clastic reservoirs in the Middle Carboniferous as well as the deeper potential. Current SPE reserves on Ravninnoe field reported by McDaniel and Associates Inc. are 3.7 million barrels proven + probable + possible, and a range of 1 to 10 million barrels contingent resources. GOST reserves for the field estimated by local institute “Caspian Energy Research LLP” are 15 million barrels C1+C2.

Following processing and interpretation of the 3D seismic Roxi will be able to re-evaluate the current estimated resources on the Ravninnoe Contract Area.

Roxi has tendered the drilling and related equipment for the drilling of the first new well, planned in Q3 2008.

In March 2008, Roxi began the first of five well re-entries planned for 2008 to establish the condition of the wellbores and possibly test-produce the reservoir. After some delays in receiving all the necessary approvals and delivering necessary equipment, work on Well #5 is progressing normally. Roxi has made preparations to re enter Well #3 immediately following a conclusion of the works and evaluation of Well #5.

Beibars Contract Area
Roxi obtained permission from the Kazakhstan Ministry of Defense to acquire a 121km2 3D seismic survey over the Beibars Contract Area. Seismic crews from the Seismic Contractor, KazGeoCo, mobilized to location on 6 May 2008 and have completed the test acquisition of data. Work will now proceed to acquire the entire survey over the next 30 to 40 days. This work is ahead of expected schedule due to the successful resolution of the land use rights for the seismic acquisition.

Following processing and interpretation of the 3D seismic Roxi will be able to estimate prospective resources on the Beibars Contract Area.

Galaz Contract Area (NW Konus)
After the acquisition of a 30 km2 of 3D seismic over the entire Galaz Contract Area (NW Konus) in January 2008, Geostan LLP has completed the processing of the data. Roxi has started to evaluate the Upper Jurassic reservoir sands as well as the exploration potential in the lower Cretaceous-Neocomian sands and in the deeper undrilled Jurassic sequences.

Roxi has completed a tender and awarded a contract for the drilling of the first new well in the Galaz Contract Area. The rig was mobilized and the first new well, Well #31, was spudded on 9 May 2008 to drill and evaluate the Upper Jurassic sands at an approximate depth of 1200 to 1300 meters. Drilling time is expected to be 30 to 40 days. Roxi plans to move the rig to a second location immediately following the successful drilling of Well #31.

Roxi completed the re entry and installation of downhole pumps in two existing wells, Well #26 and #27. Well #27 was put into test production in late April 2008. Results of the extended test will be released when the production levels stabilize. The surface facilities are being installed on Well #26 and testing is expected to begin within the month of May 2008.

Extensive infrastructure work has been completed in the Galaz Contract Area (NW Konus) including the building of a 7km access road and the initial test production and shipping facilities. Further work is planned on an ongoing basis to complete the workers camp and finish the drilling of a technical-water well to be used for drilling and treatment facilities.

Current SPE reserves reported by McDaniel and Associates Inc. for the NW Konus field are 7.9 million barrels proven + probable + possible. GOST reserves estimated by State Holding Company Cenim in 1994 for the field are 12.6 million barrels C2.

BNG Contract Area (Ayrshagyl)
BNG Ltd. LLP has been awarded an extension to its existing BNG Contract Area. Accordingly the BNG Contract Area has increased by 9.8 per cent of the total area of the contract territory to 1,561 km2.

Roxi has completed a tender for the acquisition and processing of approximately 400 km2 of 3D seismic over the northern portion of the BNG Contract Area which includes the recently awarded extension area. All bids have been received and are currently being evaluated for the award of the contract. Seismic acquisition is expected to begin in Q3 of 2008 as originally planned.

No SPE reserves or resources have yet been reported for the BNG Contract Area. Historical GOST reserves reported by the State Geological Committee are 235 million barrels C1+C2+C3.

Munaily Contract Area
After the drilling of two wells in the Munaily Contract Area in the fourth quarter of 2007, Well #H1 was completed and put onto production test in January 2008. The well flowed at a rate of approximately 80 barrels of oil per day over the first 30 day period. Additional prospective zones existing in the wellbore were perforated and added to the testing regime. Currently the well is flowing 80 to 100 barrels of oil per day. Roxi will continue to test the well to evaluate the reservoir.

Well #H2 was drilled to a depth of 600m and tested unsuccessfully in all potential zones. Roxi will continue to evaluate this well for further testing or abandonment.

Two existing wells, Well #68 and Well #83 have been re entered. Well #68 appears to be unproductive and Well #83 is still under testing and evaluation. Roxi will continue to slowly evaluate the validity of the Munaily Contract Area to determine its financial viability.
No SPE reserves or resources have yet been reported for the Munaily Contract Area. GOST reserves reported by Zapkaznedra (the state supervisory body) are 1.2 million barrels C1.

Funding
Whilst the board is very pleased with the progress to date, the pace at which the Company has developed some of its assets, in particular Galaz, has been expedited in order to target earlier production, requiring associated expenditures to be made earlier than planned at the time of the Eragon acquisition. Additionally, certain costs have also been greater than planned. Accordingly, Roxi is seeking additional working capital required to fund its development programme. The board is in advanced discussions with a number of potential international funders and will make an announcement in this regard in due course.